What are closing costs?
I am always asked about closing cost – what are they and how much? Closing costs are the expenses paid at the very end of the escrow process but do not include your down payment. These expenses typically include loan processing fees, credit report, appraisal, escrow and title fees, county transfer fees, pro-rated property taxes, and property insurance premiums. When you begin the loan process, your mortgage loan officer or loan broker should provide you with an estimate of these costs in addition to interest expenses and monthly payment amounts.
Tip:
Be careful when you compare closing costs between lenders or banks. Early estimates provide guesses of what third party service providers will charge (such as escrow, title, insurance, property taxes). Beware that expenses for those services will be the same no matter which lender or bank you choose. It’s always a good idea to know where your money is going, but you can’t group all closing costs together and then compare them to another. You will need to isolate each category of expense within each closing estimate. You can always ask your loan professional about any of the line items on the estimate and you can also review it with your real estate professional. Hopefully their network of relationships will identify service providers who will offer service discounts.
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